There’s no shortage of personal finance advice urging people to ditch their credit cards and avoid buying stuff on credit. The fear of credit cards is understandable, considering the fact that many people can trace the roots of their financial woes to credit card debts. The results of a 2016 study from ValuePenguin show that the mean credit card debt in America is as high as $5,700. Hence, people have valid reasons to be scared of credit cards.

However, avoiding credit cards because you don’t want to run into financial woes is the same as avoiding getting out of the house because you don’t want to be hit by a car. Credit cards have become an important part of personal finances. If you don’t have a credit card, you can’t have credit history – without credit history, you can’t have a FICO score. This piece provides an insight into how you can leverage credit cards to improve your finances.

Build credit

Your creditworthiness is one of the bedrocks that determine your financial stability. If you have excellent credit, you’ll find it much easier to obtain funding to finance some of life’s biggest expenses. An excellent credit score also reduces the cost of obtaining credit because you’ll get relatively low interest rates. The key to building credit is to pay up your monthly balance so that you don’t fall behind in your payments.

A valuable tip that will save you from getting behind your payments is to spend an amount that you can easily pay off – ideally about 25% of your limit. Hence, you should limit the expenses you charge to your card to about $500, if your credit limit is $2000. Paying up your monthly balance will help you build credit, avoid late fees, and get lower interest rates.

Earn credit points

When you want to apply for credit card, you should try to look for credit cards that offer impressive rewards. Earning rewards points on your credit card will provide you with ‘free money’ that you can apply towards important expenses.

Some cards allow you earn points when you use your cards for qualifying expenses; you earn points when you pay up your monthly balance, and you earn points when you refer new qualifying cardholders. You also earn points when you pay bills with your card. You can redeem points for gifts cards; you can redeem redeem cashback points for cash-like rewards.

Write down your expenses

Credit cards can help you keep track of your expenses; yet, many people are often surprised when they see their credit card bill at the end of the month. You can always check your credit card balance online to know if you are spending more money than you can easily repay.

However, a simpler but effective solution for keeping your credit card expenses in check is to keep an expenses journal. Get a portable notebook or use notes on your smartphone – write down the expense every time you charge an expense to your card. Keeping an expense journal will help you track your spending and you won’t see unpleasant surprises when it is time to pay the bill.

So, as it turns out, there is no need to be afraid of credit cards. It’s not that little piece of plastic that puts you in debt. It’s you! You have to be diligent. If you manage to keep track of your expenses, and if you plan your budget to the point, there won’t be a reason for you to worry. Diligence is the key. Use it!

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Ivan Dimitrijevic is a seasoned blogger and SEO consultant with years of experience. His set of skills includes Digital Marketing, Search Engine Optimization and blogging on a wide variety of topics. He has had many articles published on serious blogs over the years. His approach is direct, personal, professional and he will strive to use 100% of his knowledge and apply it to each and every project.

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